High Court restores Rajpura industrial project rights to SIEL

The Punjab and Haryana High Court has quashed Punjab Urban Planning and Development Authority’s (PUDA) decision to terminate a 1993 Memorandum of Understanding with Shriram Industrial Enterprises Limited (SIEL) after holding that the resumption of land acquired by the organisation under the Land Acquisition Act was arbitrary. It violated the petitioner’s right to carry on business, and failed the test of proportionality.

The Bench of Justice Sureshwar Thakur and Justice Vikas Suri ruled the land was acquired under the Act and conveyed to the petitioner company for setting up an industrial estate – a chemical manufacturing facility and a captive thermal power plant in Rajpura.

As such, the petitioner acquired a fundamental right to carry on its trade or business on the land. This right, it asserted, could not be taken away arbitrarily or without reasonable justification.

“The action of PUDA fails both the Wednesbury reasonableness test and the proportionality test,” the court observed, noting that the government’s action defied logic and fairness in light of the facts on record. The court emphasised that authorities could not impose impractical conditions or timelines when they themselves were in breach of their reciprocal obligations under the MoU.

The MoU, signed on October 14, 1993, had obligated the government to provide land and extend infrastructural and policy support, while the petitioner was to complete the project within 10 years of receiving unencumbered land. Land acquisition commenced in 1994 but was marred by protracted litigation and denotification issues, with final transfers only completed in 2007. The land acquisition dispute was formally closed in 2011.

Further delays in clearances, including environmental approvals and layout sanctions, were resolved only by 2017–2020. But PUDA issued a notice in 2024 alleging breach of the MoU for failure to complete the project in time. It terminated the MoU and resumed the land in January this year. The petitioner argued that the delay was primarily on account of the government’s failure to provide timely support and clearances, and that the 10-year completion period ought to run from the finalization of all permissions—not from 2011.

Accepting the petitioner’s plea, the court ruled in favour of SIEL and directed the quashing of PUDA’s order dated January 3. The Bench quashed PUDA’s order dated January 3, and directed that all requisite permissions and extensions be granted to the petitioner company or any subsequent industrial entrepreneur within two weeks.

The court clarified that the extension for completing the project would be for a period of three years commencing from October 4, 2024, with the possibility of further extensions if delays were caused due to the authorities’ failure to act. It further mandated that steps be taken to prevent unauthorized use of the land and that development activities be initiated in accordance with the original 1993 MoU.

Additionally, the petitioner or any successor entity was directed to rehabilitate displaced families and provide employment to at least one member of each affected family.

Chandigarh